The Valued Insurer leading the pursuit of … Kongres PIU...• genuine deep pricing and centricity...

The Valued Insurer – leading the pursuit of sustainable growth

The Intelligent Insurer concerned the search for

sustainable, profitable growth in the face of an

uncertain economic outlook

Our research for The Valued Insurer identified

commonalities in business strategies and five consistent

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG CONFIDENTIAL.0

commonalities in business strategies and five consistent

attributes that set these insurers apart from the

competition – Customer Centricity, Focus, Efficiency, Agility and Trust.

Invariably the most successful insurers have put their

customers at the heart of their business

Sustainable profitable growth15 insurers have significantly out-performed ...

10%

Bookvalue pershare

x

x

xxx

1. High

2. Former Mutuals

3. Global Titans

3. Focused Business

Model

1© 2014 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

10% Market capitalizationSource: KPMG International

Positioning illustrative

... As well as common characteristics they share some common significant attributes

1. High Growth Markets

Attributes of The Valued Insurer

Focus

Customer-



Trust

Agility

EfficiencyCustomer-centricity


Focus

Customer-

Successful insurers focus on

one or more of:

• scale in their chosen

sector

• outstanding solutions to

their customers’ needs,

Customer-centricity



Trust

Agility


their customers’ needs,

• genuine deep pricing and

risk management expertise

• ease of customer access

Whatever their situation,

they have engineered their

business to truly place their

customers at the heart of

their business


Focus

Customer-

Focus

Best-in-class insurers articulate

a clear strategy that reflects

their vision and focus.

Focus



Trust

Agility

EfficiencyCustomer-centricityTop firms have

charted a precise course

focused on a long-term view

of their customers’ needs.


Focus

Customer-

Successful insurers embrace

a culture of continuous focus

on efficiency.

Efficiency



Trust

Agility

EfficiencyCustomer-centricity Efficiencyon efficiency.

They invest in scalable systems,

processes and delivery channels

to resolve legacy inefficiencies.


Focus

Customer-

Top insurers demonstrate the

flexibility to innovate and adapt

swiftly to a

Agility



Trust

Agility


Agility

swiftly to a

changing environment.

An open mind-set characterizes

their people from the boardroom

to the front line.


Focus

Customer-Trust

Top-performing insurers have

built confidence and trust in the

Trust



Trust

Agility

EfficiencyCustomer-centricityTrust

built confidence and trust in the

eyes of their customers,

regulators, investors and the

communities they serve.

The Valued InsurerAttributes for success

Focus

Best-in-class insurersarticulate a clear

strategy that reflects their vision and focus.

Efficiency

Successful insurers embrace a culture of continuous focus on

efficiency.

Agility

Top insurers demonstrate the

flexibility to innovate and adapt swiftly to a


Trust

Top-performing insurers have built confidence

and trust in the eyes of their customers,

Customer - centricity



Top firms havecharted a precise course focused on a long-term view of their customers’

needs.

They invest in scalablesystems, processes and

delivery channelsto resolve legacy

inefficiencies.


An open mind-set characterizes their people from the

boardroom tothe front line.

their customers, regulators, investors and

the communities they serve.

... High-performing insurers chart highly individual paths, incorporating their own distinct combination of these characteristics

However, many still have a way to go …

of insurers feel their products are developed and marketed with

enough transparency to make them understandable to customers.24%

of insurers do not feel their firm's digital strategy adequately supports

building trust with clients and investors.66%

of insurers do not feel their organization has an agile business structurethat is adaptable to changing customer and market needs.57%

Only



45%

of insurers do not feel their firm’s mission statement clearly

articulates how it addresses customers needs.37%

of insurers feel their distribution network generates aconsistent positive customer experience across channels. 37%Only

of insurers do not feel their firm fully understand regulations in their local

jurisdictions pertaining to the customer agenda.

Source: KPMG International, Valued Insurer pulse survey conducted at industry events, June 2013

Experience, insights and action

The Valued Insurer - a vision for success

Building Building Building Building

propositions with propositions with propositions with propositions with

customer customer customer customer

experience at the experience at the experience at the experience at the

core and genuine core and genuine core and genuine core and genuine

insight into the true insight into the true insight into the true insight into the true

‘voice of the ‘voice of the ‘voice of the ‘voice of the

customer’ customer’ customer’ customer’ ––––

Product Product Product Product

DevelopmentDevelopmentDevelopmentDevelopment

Optimizing Optimizing Optimizing Optimizing

distribution channels distribution channels distribution channels distribution channels

to reflect customer to reflect customer to reflect customer to reflect customer

demands and demands and demands and demands and

maximize efficiency maximize efficiency maximize efficiency maximize efficiency ----

DistributionDistributionDistributionDistribution



Source: The Valued Insurer, KPMG International, 2013


Adapting to Adapting to Adapting to Adapting to

regulatory change regulatory change regulatory change regulatory change

without stifling without stifling without stifling without stifling

innovation innovation innovation innovation ----

RegulationRegulationRegulationRegulation

Empowering its Empowering its Empowering its Empowering its

people to respond to people to respond to people to respond to people to respond to

unfolding unfolding unfolding unfolding

opportunities and opportunities and opportunities and opportunities and

threats threats threats threats ––––

Governance and Governance and Governance and Governance and

PeoplePeoplePeoplePeople

The Polish perspective ... Some thoughts

What should modern financial supervision look like?

Managing the limits of insurability

Investment policy given low interest rates



Investment policy given low interest rates

Good legal regulation and its influence on the business

Target model for health insurance in Poland

What should modern financial supervision look like?Focused connection with stakeholders

“Good regulatory relations means being proactive and

making the customer fundamental to the business”

Gabriel Bernardino, Chairman, EIOPA

We see:

■ Regulators stepping in to the insurer/customer relationship to

protect consumers from the risk that sales are primarily motivated



protect consumers from the risk that sales are primarily motivated

to profit the insurer or sales agent rather than benefit consumers

■ Supervisors are now intervening earlier, shifting their focus from

scrutiny at the point of sale to focus on the sustainability of

insurers’ business models and preventing poor product design

■ Business processes and compliance frameworks require re-

modeling and remuneration and reward schemes need to change

to reflect the changing environment

What should modern financial supervision look like?The insurers' perspective

Insights and actions:

■ The complexity of regulatory change can no longer be

managed solely by the compliance function

■ Ensure regulation is discussed in the boardroom as well

as the back office – focusing on strategic as well as

operational issues

■ Invest to get ahead of the curve of regulatory



■ Invest to get ahead of the curve of regulatory

development and assess the impact for your business

model

■ Insurers need customer relevant management

information to drive strategy, sales and product design

and steer the business

“Insurance executives

increasingly need to be

responsive to customers

while balancing cost

reduction and regulatory

compliance. Successful

insurers need to craft

strategies to address all

three”

KPMG says …

Managing the limits of insurabilityUse customer insight for informed conversations and delivering value

We say: We see:

■ Insurers innovating

to help customers

manage risk e.g.

Kilimo Salama“Safe agriculture”

This 'pay as you plant' type

of insurance allows farmers

to 'try out' insurance, a

product they have never

bought before and which

has a negative reputation in

Kenya. Experience shows



Syngenta Foundation

Kenya. Experience shows

that as farmers learn to

trust insurance, they

expand their coverage and

are comfortable investing

more in their farm, raising

their productivity and

increasing their food

security

Managing the limits of insurabilityUse customer insight for informed conversations and delivering value

We say:


■ Customer expectations are increasing. Insurers need to raise their game to match how

consumers interact with service providers such as Amazon, Google and Ali Baba

■ Customers’ desires extend beyond the products insurers traditionally provide to encompass

a wider experience and a broader range of interactions – autos, home, health?

■ Develop a 360º view of customers, identifying customer data gaps and

prioritizing correction by value and importance



prioritizing correction by value and importance

“The critical issue is not the availability of data, but

how to analyze it effectively and apply the results

to the business”

■ Position customer insight as a Center of Excellence rather

than separate data collection points for Marketing, Finance,

customer service etc

KPMG says …

“Invest to get ahead of the curve of regulatory

developments and assess the impact for your business

model. Lobbying activity is likely to be more effective if

coupled with high levels of compliance with current

standards ”

We say …


■ Greater focus on consumer issues and the conduct agenda is

only one dimension of the current round of regulatory reform

Good legal regulation and its influence on the businessAdapting to regulatory change without stifling innovation



only one dimension of the current round of regulatory reform

■ The Valued Insurer manages regulatory obligations efficiently

at both a local and group level with a simple operating model

and decision-making processes

■ Those charged with governance have a clear line of sight over

its compliance with local law and regulations and the

application of consistent minimum standards across its world-

wide operations

“The reality is that

regulatory concerns need

to be on the Board

agenda in order to

evaluate their potential

impact and inform

strategic decision-making”

KPMG says …

Demographics Technology

EnvironmentSocial

values and

ethics

Target model for health Strain on public finances

insurance in Poland



“As populations in mature markets age and the taxpayer base shrinks, stretched public

finances will be unable to match increasing expectations, increasing a need for self-reliance”

KPMG says …

c15%

Lots of things have been growing in healthcare ...



Source: KPMG, data for the Netherlands




“Some insurers seem much more focused on products than on their customers. Have they

got to grips with retirees’ fluctuating needs throughout the various phases of retirement?

Boomers and successive retirement groups are looking to protect quality of life rather than

wealth accumulation. Maybe we need to think in terms of insurance in kind – a combination

of housing, health and pensions rather than traditional insurance services.”

KPMG says …


Cure

Voluntary health care

Private


ZFW


Privatehealthcare insurance


Suo Wtz

20061960 to 2006


2013The Netherlands …



Singapore ...“Singapore offers an intriguing model. The aim of the country’s healthcare system is to get

patients to face some of the costs of their own treatment. Healthcare is part-nationalised and

somewhat subsidised. Individual citizens have a compulsory savings account to build up a nest

egg for medical expenses, and there’s an insurance programme to deal with the most

expensive treatments. But, broadly, the idea is that you have money in a healthcare account,

and it’s up to you to decide how you want to spend it. This makes healthcare more like a

regular consumer market.” Source: www.ft.com Healthcare: the final reckoning 3-4 May, 2014

Cure

CareAWBZ

ZFWPrivate

healthcareinsurance

Suo Wtz Integrate cure & care

The Valued Insurer - a vision for success

































Delivering customer insight

Customer-centricity starts with genuine insight into the true ‘voice of the customer’



Source: Amazon 2012 Letter to Shareowners

Most insurers only have a basic understanding of their customers...

ADDRESS

NAME



DATE OF BIRTH

PHONE NUMBER

Grasping the role of customer data in other industries illuminates the possibilities within Insurance

GAMING AND HOSPITALITY

� Collects data on 40M members across touch points…

� Uses data analytics to differentiate based on the travel experience, rather than price in predicting preferences…

� Yielding counterintuitive strategies, like spending more

to incent a customer who visits only once, versus one who

comes back again and again



TRAVEL AND TOURISM

comes back again and again

� SPG hotel chain collects data and creates member personas

� Finding it is more important to target based on when the customer may buy, not just who the customer is

� Timing outreach to customers who are about to go on a trip using offers from relevant brands within the Starwood Family

Big Data Is Everywhere

WHAT IS BIG DATA ALL ABOUT?WHAT IS BIG DATA ALL ABOUT?

What is it? Massive data stores to

which algorithms are

applied to derive insights

on consumers, behaviors,

etc.

Who is it Big Data is within

Mass

Little differentiation of

consumers

WHAT ARE THE BENEFITS?WHAT ARE THE BENEFITS?

Big data enables a shift to one-to-one customer interactions



Why the excitement?

New technological

possibilities will make it

critical to winning

Who is it for?

Big Data is within the reach of all companies… not just

Google and Facebook

Tailored

Targeted

Consumers categorized

based on similarities

Consumer is unique

Digital Analytics are opening up a host of new customer insights –product design and distribution

Car owner

Name

Date of birthHome owner

Has no elderly dependents

Address

Home phone number



Travels for work

Plays golf

Office phone number

Email address

OccupationNew born

baby

Owns a dog

Children going to school

Uses social media

Married 3 children

Salary

Customer-centric business model





Recap

The Valued Insurer - a vision for success for Japanese insurers in Europe

































Key customer and market trends

We see a number of key trends impacting the industry now and over the medium term ...

Customers face an uncertain retirement &

healthcare costs

Customers want to

feel they are a

“segment of one”

We see Opportunities

� Political and regulatory change is a fact of life

� Current savings are not enough to provide for a secure and healthy retirement

� Proposition and products need to appeal to a diverse customer base

� Requires deep customer insight and analytics

� Shift to digital interaction

1.

2.



Obtaining advice and

guidance is changing

dramatically

The value chain is

under pressure

Customers demand

value for money and

‘right first time’

� Shift to digital interaction� Requires integrated multi-channel approaches to research, and

service

� Margin pressure is a catalyst for transformational change� Players searching for sustainable growth

� New talents needed to succeed

� Customers want transparent products that meet clear needs and provide value for money

3.

4.

5.

Thank you

Presentation by Mary Trussell

[email protected]

Tel: +44 207 311 5461

KPMG The Valued Insurer

KPMG The Intelligent Insurer

Tel: +44 207 311 5461

Customer Insight

Customer Strategy &

Proposition

Channel

Optimization

Service

Excellence

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© 2014 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG CONFIDENTIAL.

The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International").

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information

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The Valued Insurer leading the pursuit of … Kongres PIU...• genuine deep pricing and centricity...

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